Correlation Between Us Government and Active Bond
Can any of the company-specific risk be diversified away by investing in both Us Government and Active Bond at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Us Government and Active Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Active Bond Fund, you can compare the effects of market volatilities on Us Government and Active Bond and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Us Government with a short position of Active Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Active Bond.
Diversification Opportunities for Us Government and Active Bond
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UGSFX and Active is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Active Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active Bond Fund and Us Government is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Us Government Securities are associated (or correlated) with Active Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active Bond Fund has no effect on the direction of Us Government i.e., Us Government and Active Bond go up and down completely randomly.
Pair Corralation between Us Government and Active Bond
Assuming the 90 days horizon Us Government is expected to generate 2.27 times less return on investment than Active Bond. In addition to that, Us Government is 1.08 times more volatile than Active Bond Fund. It trades about 0.05 of its total potential returns per unit of risk. Active Bond Fund is currently generating about 0.12 per unit of volatility. If you would invest 937.00 in Active Bond Fund on September 5, 2024 and sell it today you would earn a total of 7.00 from holding Active Bond Fund or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Us Government Securities vs. Active Bond Fund
Performance |
| Timeline |
| Us Government Securities |
| Active Bond Fund |
Us Government and Active Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Active Bond
The main advantage of trading using opposite Us Government and Active Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Active Bond can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Active Bond will offset losses from the drop in Active Bond's long position.| Us Government vs. Income Fund Of | Us Government vs. American Mutual Fund | Us Government vs. American Mutual Fund | Us Government vs. American Funds Income |
| Active Bond vs. Aig Government Money | Active Bond vs. Us Government Plus | Active Bond vs. Lord Abbett Government | Active Bond vs. Us Government Securities |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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